Abstract

This article examines
negotiated plea agreements introduced by the Attorney General
in 2009 for cases of serious or complex fraud, and the degree
to which these differ from plea agreements reached through
informal plea bargaining in other types of criminal case. It
first considers whether the formally negotiated agreements
are a result of coercion being brought to bear on defendants,
or of defendants ‘playing the system’ (the two
most common criticisms of ordinary plea bargains). It is then
argued that an alternative conceptualisation may be more
appropriate in serious fraud cases. To this end, approaches
to plea bargaining more commonly applied in the United States
(consensual, concessions, and contractual models) are
considered in light of the current context. It is submitted
that whilst these approaches have only limited application to
defendants in ordinary criminal cases, they may help explain
the dynamic of plea agreements in serious fraud cases. This
in turn provides a basis upon which to assess the fairness of
negotiated pleas in serious fraud cases, and highlights
issues which lie at the core of the plea bargaining debate.

1. Introduction

Plea bargaining
in England and Wales has received renewed levels of attention
in recent years in terms of policy, case law and (to an extent)
academic research. Since Baldwin and McConville’s
ground-breaking study Negotiated Justice in 1977 there
had been surprisingly little research on the practice in this
jurisdiction. This is in stark contrast to the United States
where plea bargaining has remained firmly on the agenda for
several decades. The announcement in 2008 of powers to be
granted to the Serious Fraud Office (SFO) to negotiate plea
agreements in cases of serious fraud has inevitably sparked
further interest, albeit primarily in practitioner
journals. (1)
Informal plea bargains by means of the sentence discount,
reduced or lesser charges, and Goodyear [2005] EWCA
Crim 888, [2005] 1 WLR 2532 advance indications of sentence
have long been a common feature of criminal trials. However,
SFO negotiated plea agreements are the first openly regulated
and formalised form of plea bargain in England and Wales.
Several high profile cases (on which this article will focus)
have involved the use of the new powers, most notably R v
Innospec [2010] Lloyd’s Rep FC 462, R v BAE
Systems Plc [2010] EW Misc 16 (CC) and R v
Dougall [2010] EWCA Crim 1048, [2011] 1 Cr App R (S) 37.
This in turn has fuelled further academic debate about the
nature and role of plea bargaining in such cases (Vamos 2009;
Watson 2010), and coincides with new work on plea bargaining in
‘ordinary’ criminal cases (Rauxloh 2012).

As the procedure
for negotiating plea agreements in cases of serious fraud is in
its infancy, and plea bargaining has previously always taken
place behind closed doors in England and Wales, there has been
considerable attention paid to the new process, not least by
the judiciary. In Innospec, Thomas LJ issued lengthy
sentncing remarks which considered the duties of the prosecutor
and the way in which the agreement had been reached. (2) Most notably, Thomas
LJ stated his opinion (at para. 40) that the fine imposed was
“wholly inadequate” but that he felt bound by the
terms of the agreement already reached between the SFO, the US
Department of Justice, the Securities and Exchange Commission
and the US Office of Foreign Assets Control. This in itself
demonstrates the need for a closer analysis of the nature of
the agreements, and a level of judicial disquiet regarding the
potential operation of future plea agreements in fraud, and
other, cases. During the consultation stage of the Attorney
General’s Guidelines, a sub-Committee of Circuit Judges
stated that they were “fundamentally opposed” to
the extension of any plea bargaining framework beyond serious
or complex fraud cases (Council of HM Circuit Judges June 2008,
at para. 6). Ostensibly, plea agreements in serious fraud cases
have not been introduced as a precursor to formalised plea
agreements in other types of criminal case, but a degree of
scepticism about that assurance would be prudent. When
the powers were first announced, Baroness Scotland, the
Attorney General at the time, was at great pains to distinguish
them from any form of plea ‘bargaining’ (Attorney
General’s Office Press Release, March 18th
2009). Only three years on, it is accepted that the SFO
agreements are indeed plea ‘bargains’ and the term
is used by the SFO in its own online information. (3) The current SFO plea
agreements are therefore all the more important, not just in
their own right, but because they have the potential to become
a blueprint for formalised plea bargaining on a broader
scale.

The focus of this article is
on the approaches which can be applied to better understand
the nature of the agreements themselves; in particular the
balance of the parties’ bargaining powers. The US
literature on the application of models of bargaining to plea
agreements is exponentially more developed than the UK
literature, and several distinct approaches can be
identified: consensual, concessions and contractual. It is
argued that these models may indeed be applicable to the SFO
procedure, and that SFO agreements possess different
characteristics to those of ordinary plea bargains, which in
turn gives rise to a different set of concerns about the
justice of bargained for case dispositions.
2. 2>2. The current legal
framework

Before exploring
the applicability of approaches to, and models of, plea
bargaining to negotiated plea agreements, it is first necessary
to outline the current legal framework. In ordinary cases
(those which do not fall within the SFO definition of serious
or complex fraud), (4) there is no formal framework of plea
bargaining.

The closest the UK courts
came to tackling the issue was the case of R v
Turner [1970] 2 QB 321 in which plea bargaining was
referred to as “the vexed question of so-called plea
bargaining”. The resulting Turner rules state,
inter alia, that:

“Counsel must be completely free to do what is
his duty, namely to give the accused the best advice he can
– if need be in strong terms. This will often include
advice that a plea of guilty, showing an element of
remorse, is a mitigating factor which may well enable the
court to give a lesser sentence than would otherwise be the
case.” Turner [1970] 2 Q.B. 321, 326

The appeal in
Turner was allowed only on the basis that the
appellant had been given the impression that counsel’s
views on the outcome of the case on a guilty plea compared
with a not guilty plea came directly from the trial judge,
not because counsel had exerted any pressure on Turner. The
Court of Appeal felt this was “a very extravagant
proposition, and one which would only be acceded to in a very
extreme case” [1970] 2 QB 321, 325. The judgment in
Turner also stated that the judge should never
disclose the sentence he was minded to impose, but this
element of the rules has been superseded by the Criminal
Justice Act 2003. Schedule 3 of the Act provided for advance
indications of sentence whereby a defendant may request an
indication of the maximum sentence, if he were to plead
guilty at that stage. If an indication is given, it is
binding on the court. In Goodyear, the Court of
Appeal laid down additional guidelines as to how sentence
canvassing should work in practice in the Crown Court and
held that:

“A judge should never be invited to give an
indication on the basis of what would appear to be a
‘plea bargain’. He should not be asked or
become involved in discussions linking the acceptability to
the prosecution of a particular plea or bases of plea and
the sentence which might be imposed and he should not be
asked to indicate levels of sentence which he might have in
mind depending on possible different pleas.” [2005]
EWCA Crim 888, [2006] 1 Cr App R (S) 6 [67)

This denial
that advance indication of sentence has anything to do with
plea bargaining is difficult to rationalise, other than on the
narrowly conceived basis that a response to a request is just
that, rather than a bilateral exchange of concessions in the
stricter sense of a ‘bargain’. But what is a
formal, judicial indication of a light(er) sentence in exchange
for a guilty plea, if not a plea bargain?

Plea
bargaining is undoubtedly somewhat hidden behind a
façade of measures introduced to maximise administrative
efficiency and the rhetoric of ‘bringing offenders to
justice’. Nonetheless, it is commonplace and is
facilitated (informally) by several mechanisms, in addition to
Goodyear indications. The lynchpin is the sentence
discount, which has been increasingly structured since the
first publication of the Sentencing Guidelines Council
Reduction in Sentence for a Guilty Plea Guideline in
2004. Every defendant will be made acutely aware of the fact
that in exchange for a guilty plea, he can expect up to one
third reduction in sentence from that which he would receive
following a conviction at trial, with the greatest discounts
available to those who plead guilty at the earliest
opportunity. Charge bargains are also a common means of case
disposition and are facilitated by the exercise of the
prosecutor’s discretion in reducing or dropping charges
in exchange for a guilty plea. This is fully compatible with
the Code of Conduct for Crown Prosecutors. (5) Additionally, bases of plea
can be used to agree a less culpable version of events (with
the resulting reduction in sentence) in exchange for a guilty
plea, in what Darbyshire (2000) refers to as “fact
bargaining”.

So,
despite plea bargains being a by no means unfamiliar feature of
the criminal justice system in England and Wales, SFO plea
agreements nonetheless represent a marked departure from the
system of plea bargaining which applies in ordinary criminal
cases. The Attorney General’s Guidelines provide that
discussions may be initiated by either the prosecutor or the
defence and should not usually commence until the suspect has
been interviewed under caution (para. C2). All discussions are
to be recorded in writing, and even the invitation to initiate
discussions should be in the form of a letter (para. C4). If an
agreement is successfully reached as to pleas and charges, the
parties should attempt to present a joint written submission to
the court as to sentence, although the Guidelines do make clear
that the submission as to sentence is not binding on the court
(para. D12). The Guidelines also set out the general principles
that the prosecutor must act “openly, fairly and in the
interests of justice” and justice is interpreted as the
requirement that the plea agreement reflects the seriousness of
the offending and allows victims, the court and the public to
have confidence in the outcome. They state that “[t]he
prosecutor must not agree to a reduced basis of plea which is
misleading, untrue, or illogical” (para. B2).

As SFO plea agreements
are more clearly structured, regulated and transparent than
their informal counterparts, this gives rise to questions
about what this means for the traditional view of plea
bargaining. Is fraud ‘different’? What is the
nature of the agreements? To what extent does the balance of
bargaining power shift? The remainder of this article seeks
to address these questions.

The two
most prevalent criticisms of (informal) plea bargaining are
diametrically opposed: (i) that it operates coercively against
defendants and (ii) that it allows defendants to ‘play
the system’ and evade appropriate convictions and / or
sentences.

The
groundswell of academic opinion encapsulates the first
criticism, that plea bargaining is undesirable because it
disadvantages the defendant by robbing him of the genuine
choice to exercise his right to trial and places pressures upon
him to plead guilty. The sentence discount is regarded not as a
benefit, but as a “trial penalty” (Darbyshire 2000)
which punishes defendants for wasting the state’s
resources if they are convicted following a trial. Additional
charge, fact or sentence bargains are viewed as further undue
inducements to plead guilty. If a plea bargain is struck,
evidence is not tested in open court and the prosecution is not
required to prove the case against the defendant. Instead, the
defendant is required to make an assessment of the likelihood
of conviction at trial, and if the risk of conviction and a
higher sentence appears too great, the defendant is likely to
opt for a plea bargain. This may seem a rational choice, and if
the defendant is indeed factually guilty gives rise to the
criticism that it allows the defendant to escape with a lighter
punishment than is his just desert. However, this criticism
only applies if the defendant was able to make an informed
choice, based on full knowledge of the relevant issues, was not
unduly influenced by threats of a higher sentence, and received
quality legal advice. As several studies suggest, this is not
so easy to come by. (6)

Not only
do inducements to plead guilty operate unfairly against
factually guilty defendants, but Baldwin and McConville (1977),
McConville (1998) Hodgson and Belloni (2000), Darbyshire (2000,
2005), Ashworth (2005), and Sanders, Young and Burton (2010)
all adopt the position that these pressures are so powerful
that even innocent defendants may plead guilty.

The media
and policy approach to plea bargaining in England and Wales
takes a very different stance. The practice is generally
portrayed by the media as a loophole which allows defendants to
escape the punishment they deserve, a view which is reinforced
by the frequency with which defendants in US crime dramas are
able to ‘cut a deal’ and which many members of the
public may mistakenly believe to be representative of all types
of plea bargain across all jurisdictions. There is a perception
(part of a wider phenomenon of public opinion that sentencing
is too lenient, see for example Hough and Roberts (1998)) that
the sentence discount allows defendants to ‘get away with
it’ and to play the system by trying to extort as many
concessions as possible from the state. This perception is not
limited to the media, nor to the public; it also comes across
markedly in the 1993 Royal Commission on Criminal Justice, the
2001 Auld Report, and the Justice for All White Paper,
published in 2002.

Despite the gulf
between these perspectives on plea bargaining, both sets of
objections do have in common a distaste for the betrayal of
adversarial principles which plea bargaining entails. The
resulting “bazaar atmosphere” (McDonald 1979) in
which plea bargaining takes place is seen to reduce the
criminal process to an unprincipled series of exchanges of
concessions and rights.

4. Coercion in serious fraud
cases

When the
criticisms outlined above are applied to formal plea agreements
in cases of serious fraud, however, it becomes apparent that
they are somewhat differently contoured. It appears that there
is considerably less scope for the prosecution or court to act
coercively and pressurise the defendant into a bargain.
Although the stakes may be high for the companies and
individuals involved in fraud, bribery or corruption, they are
nonetheless unlikely to be as high as the loss of liberty faced
by, for example, a defendant charged with his third domestic
burglary. The defendant charged with burglary faces a potential
sentence of the maximum 14 years in prison, and perhaps nine or
ten years even following a guilty plea. When the defendant in
an SFO investigation is a company, the potential risk to
individuals amounts at most to loss of reputation, employment
or earnings. Even where individuals are charged, an immediate
custodial sentence is unlikely, following a guilty plea. In
Dougall [2010] EWCA Crim 1048, [2011] 1 Cr App R (S)
37 the defendant had taken part in the large scale corruption
of foreign officials, but had cooperated fully with the
investigation and assisted the SFO in its prosecution of others
involved, as part of a plea agreement. In the agreement, the
Director of the SFO made the submission to the court that any
custodial sentence imposed should be suspended. Dougall was
sentenced to 12 months imprisonment, and appealed; his appeal
was allowed and the sentence was reduced to the suspended
sentence (of 12 months) envisaged by the plea
agreement.

The case is
particularly significant as the Court of Appeal took the
opportunity to comment on the appropriateness of suspending
sentences in cases of this nature. In his judgment, Lord
Judge CJ was critical of the SFO for having in effect
advocated on behalf of the defendant and requesting that the
court impose a particular sentence, stating that: “look
where we may, in our criminal justice system, agreements
between the prosecution and the defence about the sentence to
be imposed on a defendant are not countenanced” [2010]
EWCA Crim 1048, [2011] 1 Cr App R (S) 37, [23]. The SFO had
in fact gone further still in its submission in
Dougall, by suggesting that as a general
rule, it would not be appropriate to impose immediate
custodial sentences on offenders in similar cases:

“Unless a ‘white-collar’ defendant,
in an appropriate case, has the prospect of avoiding an
immediate custodial sentence by fully co-operating with the
authorities the important public interest in him doing so
will not be secured. For such a defendant it is the fact of
being sent to prison that matters, not the length of the
sentence…” [2010] EWCA Crim 1048, [2011] 1 Cr.
App. R. (S.) 37, 32

Although
the appellate court endorsed the trial judge’s view that
a convicted offender in a fraud case was still a ‘common
criminal’, undeserving of special treatment, Lord Judge
CJ acknowledged that it would be “unrealistic to ignore
these considerations” and that it would “normally
follow” that a defendant whose sentence was 12 months or
less, had cooperated fully with the investigation, and whose
case had mitigating factors, should have his sentence suspended
[2010] EWCA Crim 1048, [2011] 1 Cr App R (S) 37, [36]. If, even
at a serious level of large scale criminality, the worst case
scenario for an individual, following a guilty plea, is a
suspended sentence, and the prosecutor himself advocates this
position, then the argument that plea bargains operate
coercively in such cases is considerably weakened. Undoubtedly,
the defendant will feel some pressure to plead guilty precisely
in order to avoid a custodial sentence, but it is submitted
that this pressure is not exerted or likely to be felt in the
same manner as in other cases. Incentives to comply and engage
with SFO plea bargains arise not so much from the coercive
legal pressures prevalent in other types of case, but rather
stem from an organisational, business, or perhaps personal
rationale. Individuals or companies have a vested interest in
cooperating once evidence of fraudulent activity has been
discovered. This may be to evade a custodial sentence, but is
more often to minimise damage to their companies, reputations,
and lifestyles. These are powerful self-interests and may well
induce individuals to cooperate, but where liberties are not at
stake, the reach of coercive power is much reduced. (7)

It is of
course still true that an SFO plea agreement eliminates the
need for the prosecution to prove the case in open court, but
the defendant in a serious fraud case has far greater
resources. He is likely to be educated, informed of the legal
and factual issues, aware of the options open to him and
represented by qualified, specialist lawyers. This is in stark
contrast to the position an ordinary defendant may find himself
in. He is likely to possess limited knowledge of the legal
issues, perceive his options to be ‘prison’ or
‘less time in prison’ and be represented by an
overworked barrister who may have his own interests in
encouraging the defendant to plead guilty. (8)

It seems therefore,
that the balance of power in an SFO plea agreement is not
such that the prosecution or the court is able to coercively
pressurise a defendant (whether a company or an individual)
into a plea bargain. The one significant exception to this is
if a defendant who has started the process of reaching a plea
agreement chooses to opt out. The Attorney General’s
Guidelines provide that the prosecutor may not use the fact
that the defendant has taken part in plea discussions, nor
any information disclosed during those discussions, as
evidence against that defendant, should the discussions fail.
This seems in line with the stated objectives of fairness and
justice. However, there are several caveats. If a signed plea
agreement has been concluded, this may be used as confession
evidence against the defendant, should he choose to opt out
of the agreement after that stage. Further, even if there is
no signed plea agreement, information provided by the
defendant may still be used against him in any prosecution
for related charges, as may information gleaned from
enquiries made as a result of provision of evidence by the
defendant (para. C8). This latter point is particularly
disingenuous, as any information could potentially be deemed
to be the result of ‘enquiries’. In short, once a
defendant has commenced plea discussions with the SFO, it
becomes very difficult to backtrack, and in this scenario,
the SFO undoubtedly retains the greater bargaining
power.

5. ‘Playing the
system’ in serious fraud cases

In
ordinary criminal cases, the argument that plea bargains allow
defendants to ‘play the system’ is unfair and
misjudged. The defendant has few bargaining chips and faces
considerable pressures to plead guilty and forgo his right to a
trial, regardless of the strength of the evidence against him.
In serious fraud cases, however, there is greater scope for the
argument to carry weight. In lengthy, complex and often
international investigations, those accused of fraud, bribery,
or corruption have recourse to greater bargaining powers, with
the consequence that the outcomes may be seen as unduly
lenient.

The plea
agreement in the BAE Systems case [2010] EW Misc 16
(CC) in particular, makes a mockery of the provision in the
Attorney General’s Guidelines that the plea agreement
ought to instil public confidence and not be based on a plea
which is misleading, untrue or illogical. BAE Systems had been
accused of wide-ranging multi-national bribery over several
years, yet pleaded guilty to one charge of failing to keep
reasonably accurate accounting records contrary to s.221 of the
Companies Act 1985 in relation to its activities in Tanzania,
on the basis that it did not admit corruption. The company was
fined only £500,000 after having indicated a willingness
to pay a £30m penalty as an ex gratia payment to the
people of Tanzania, but that any fine would be deducted from
this sum. In reaching his sentence, Mr Justice Bean stated that
he felt a ‘moral pressure’ to keep the fine low for
this reason. BAE Systems had also agreed to pay a $400m fine to
the US relating to its activities in Saudi Arabia and Eastern
Europe, and as part of the settlement, the SFO agreed that it
would not pursue its investigations into those other potential
charges. The SFO had also granted an indemnity for all offences
committed in the past, whether disclosed or otherwise, which
Justice Bean described as “surprising”. Bean
J’s sentencing remarks are an exercise in judicial
restraint, it seems clear that he felt himself unduly
constrained by the terms of the settlement agreement, and makes
several references to his lack of power to vary the terms or to
pass a sentence which would better reflect the scale of the
alleged offending. (9) Similarly, in Innospec [2010]
Lloyd’s Rep FC 462 the court imposed a penalty lower than
the sentencing judge felt appropriate, describing the $12.7m
fine as an inadequate penalty which did not reflect the scale
of the criminality involved. Nonetheless, Thomas LJ stated that
he felt bound to do so as the US Federal District Court had
already approved the plea agreement and that in the context of
the global agreement, it would have been unjust to impose a
greater fine (R v lnnospec Limited [42].

The fact
that SFO plea agreements may involve international agencies and
global settlements can thus create leverage for defendants in a
way which will never be a feature of ordinary criminal cases.
Similarly, defendants in bribery or corruption investigations
are in a position to offer reparations to nations, and again
this is a bargaining tool not open to defendants in ordinary
cases (not even in ‘ordinary’ lower level fraud
cases). Additionally, whilst evidence not being tested in court
is conventionally cited as an example of plea
bargaining’s disregard for the defendant’s due
process rights, in a high profile corruption case, this can
work to the distinct advantage of the defendant company. There
are no doubt many damaging details of a company’s
activities which can be kept out of the public eye by virtue of
a plea agreement. To an extent the principle applies to
defendants in all criminal cases, but the advantages to a large
organisation which wishes to continue trading are undoubtedly
far greater. A hugely significant factor which facilitates
these outcomes is that they are also in the SFO’s
interests; its priorities are not those of the CPS. The SFO has
wider economic interests, for example in not forcing a company
out of business and punishing innocent employees. As its
submissions to the court in Dougall demonstrate, the
SFO is keenly aware that unless it can be seen to make deals
which are attractive to defendants, it risks losing
cooperation, and with that its own effectiveness.

In some
senses then, ‘playing the system’ appears to be an
accurate way of describing the outcomes of negotiated plea
agreements in serious fraud cases. Defendants, particularly in
high profile cases, have access to considerable bargaining
power and resources with which plea negotiations can be
influenced. However, this may in fact be as inaccurate a
conceptualisation of plea bargaining as it is in ordinary
cases, albeit for different reasons. In serious fraud cases the
system itself is also playing, to an even greater extent than
in other cases. It derives considerable benefits as a result.
In 2010–11 the average SFO investigation incurred costs
of £910,000 and took 24 months to conclude (SFO Annual
Report and Accounts 2010–2011). Plea agreements which
reduce those costs, require shorter investigations, and allow
the SFO to demonstrate its ‘success’ in tackling
fraud are hugely advantageous to the agency. This is true to
some degree of CPS prosecutions, but as the SFO took only 17
cases to trial in 2010–11 and almost all SFO
investigations are deemed newsworthy, the scope and scale of
the prosecutions undertaken by the agencies are entirely
different.

The notion that
defendants in serious and complex fraud cases are being
allowed to manipulate the system to their own advantage is
therefore overly simplistic, and a more nuanced
conceptualisation of the plea agreements is necessary. It is
submitted that this can be better achieved by using
alternative models of plea bargaining as a lens through which
to examine the agreements.

6. Alternative models of plea
bargaining

The words
‘consensus’, ‘concessions’ and
‘contract’ are used frequently, but
inconsistently, within the existing literature on plea
bargaining, which has developed in a piecemeal fashion over
the past decades. This article takes ‘consensus’
to mean something akin to the dictionary definition of
‘agreement in opinion’. If a plea bargain is
arrived at by consensus, the final outcome reflects the
defence and prosecution’s agreed assessment of the
correct, or just, outcome. This differs from a contractual or
concessions model in that although previous literature does
not consider whether they are synonymous, it is argued that
they both have at their core the principle that rights,
benefits and risks can be traded. The final outcome may not
be arrived at by consensus as to the ‘right’
outcome, but it is an agreement to which both defence and
prosecution have subscribed. (10)

6.1 Plea bargaining as
consensus

Plea bargaining has
previously been considered in the light of a consensual model
of justice by the North American literature (Heumann 1974;
Rosset and Cressy 1976; Church 1978; Jacob 1984; Nardulli,
Eisenstein and Flemming 1985) and by literature on
continental European criminal justice systems (Jung 1997),
but not in the UK context. Nardulli, Flemming and Eisenstein
considered both concessions and consensus models and
described the consensus model as one which stresses the
importance of shared understandings in “lubricating the
court’s machinery” (1985, p.1107). The authors
adopt Rosset and Cressy’s view that:

“Even in the adversary world of law, men who
work together and understand each other eventually develop
shared conceptions of what are acceptable, right and just
ways of dealing with specific kinds of offenses, suspects
and defendants. These conceptions form the bases for
understandings, agreements, working arrangements and
cooperative attitudes.” (Rosset and Cressy 1976,
p.90). (11)

When applied to
ordinary criminal cases, the overwhelming flaw of this
consensual conceptualisation of plea bargaining, if it is to
be viewed as a legitimate means of case disposition, is that
the consensus never involves the defendant. The
‘shared conceptions’ are invariably those of the
defence and prosecution lawyers and perhaps the judge and
other court staff more widely. Lawyers effectively exist in a
microcosm in which their concepts of ‘just’
outcomes dominate the delivery of criminal justice, and these
concepts may conflict with defendants’ best interests.
Some commentators (although significantly, writing primarily
of inquisitorial systems) have nonetheless described plea
bargaining as a consensual exchange from which defendants can
benefit. Jung argues that:

“The notion of criminal law as the ensign of the
monopoly of power vested in the state, and as clearly
distinct from private law, begins to falter. Elements of
negotiation and participation, hitherto restricted to the
sphere of private law litigation, are proliferating in all
phases of criminal procedure. This indicates a shifting
equilibrium between state, society and the
individual” (1997, p.116).

Given the power
differential between lawyers and defendants, and evidence of
negative attitudes expressed towards defendants, it seems
unlikely that defendants in ordinary criminal cases can
meaningfully engage with a consensual process of plea
bargaining. (12) However, some features of a consensual model may
be applicable to negotiated pleas in serious fraud cases. As
stated earlier, there is a reduced power differential between
the defendant and the legal professionals involved in an SFO
investigation. As Katz described it in the US context there
is less “social distance” (1979, p.431) between
the parties, which makes them more likely to exercise their
discretion in favour of each other. Further, when there is
less at stake for the defendant in terms of sanctions, there
is greater scope for genuine agreement. Few defendants would
heartily agree to a prison sentence, but a company director
may well genuinely agree to his company paying a penalty.
Consensus is easier to reach when individual liberties are
not affected. Ultimately the result, as with all plea
bargains, is that those with bargaining power determine the
outcome of the case. In ordinary criminal cases this almost
always excludes the defendant (though includes the defence
lawyer), but in serious fraud cases the defendant often
possesses sufficient power to play a greater role in the
outcome. This does not necessarily equate to a genuine
consensus though, and certainly may not tally with what
victims or society perceive to be the right outcome. The
latter issue is particularly problematic in cases where
corruption and exploitation of a third world country are
involved. Indeed, many sections of the media expressed their
outrage at the conclusion of the BAE Systems case,
and to some extent following the judgments in
Innospec and Dougall. Moreover, any plea
negotiation takes place within an adversarial dynamic,
regardless of the type of case or defendant. No matter how
fully an individual or an organisation cooperates, they are
not willingly in that position and it would be naïve to
expect genuine consensus. This article therefore adopts the
position that the concessions / contractual approach
discussed below may be more appropriate.

The
concessions model of plea bargaining is well established, and
is the predominant means by which plea bargains are viewed
within much of the North American literature; the application
of a contractual perspective to the concessions model gained
momentum during the early 1990s (Scott and Stuntz 1992a, 1992b;
Schulhofer 1992). The essence of the model is that the wide
range of issues within a criminal case which can give rise to
strengths and weaknesses, such as evidentiary flaws or the
credibility of witnesses, become tools by which concessions can
be extracted, agreements made and deals struck. Significantly,
this model does not assume that genuine consensus is possible.
The dynamics of plea bargaining within this approach can be
viewed either as an unprincipled “bazaar”, or a
more regulated and orderly “supermarket” (McDonald
1979, p.386; Nardulli, Flemming and Eisenstein 1985,
p.1106).

To
clarify what is meant by the bazaar analogy in this instance;
it is taken to describe a system of case dispositions in which
there is some degree of disorder and inconsistency, scope for
haggling, the values of commodities (sentences and charges)
fluctuate. The best deals are to be had by those who maintain a
good relationship with those with whom they trade frequently.
By contrast, Nardulli, Flemming and Eisenstein write that
courts may “also operate more like supermarkets in that
they are more orderly than the freewheeling concessions model
may suggest” (1985, p.1109). In a
‘supermarket’ concessions model of plea bargaining,
prices (that is, sentences, charge reductions and outcomes)
would be more firmly fixed, with less scope for haggling, but
also less scope for uncertainty and ‘bad deals’.
The language used during criminal cases echoes that of
contractual exchanges: court room actors refer to guilty pleas
being ‘offered’ or ‘accepted’, and
‘deals’ being ‘taken’. The practice of
the Crown or the defence indicating that it would be willing to
offer, consider or accept guilty pleas to certain offences
mirrors that of contractual invitations to treat. The use of
the stock phrase ‘indicate a willingness’ becomes a
device with which to legitimise the haggling.

Scott and
Stuntz argued that plea bargains should be viewed in terms of
contract theory, rather than due process rights, and that if
plea bargains are analysed contractually, they are not
necessarily coercive. They reasoned that defendants should have
the freedom to contract or exchange entitlements in criminal
proceedings and that to deny them that ability (by abolishing
plea bargaining) would undermine the value of those
entitlements (1992a, p.1913). Easterbrook had similarly written
that defendants are entitled to either use or sell their right
to trial (1991, p.1975). Scott and Stuntz argued that the
elements of contracts which would make them unenforceable (such
as duress or unconscionability) did not, as a matter of course,
apply to plea bargains. They felt that large sentencing
differentials did not equate to guilty pleas entered under
duress, but rather that the right to take a case to trial was
highly valuable and that the prosecutor was willing to pay a
high price for it (1992a, p.1921). They argued that a bargain
is only unconscionable if it is a ‘take it or leave
it’ offer which does not react to individual preferences
(ibid., at p.1924) but that plea bargains involve
bargains whereby the terms of the agreement can be
individualised. This latter point is particularly resonant in
the context of the highly tailored plea agreements entered into
by the SFO.

Even in
ordinary criminal cases there are indications that the UK
system of plea bargaining is becoming increasingly contractual.
This is most evident of Goodyear indications which are
a clear and enforceable bargain between a defendant and the
state. They empower the defendant by providing him with the
certainty that the sentence imposed will not exceed a specified
maximum. That Goodyear indications are enforceable is
not doubted, and R vMcDonald [2007] EWCA
Crim 1117, [2008] 1 Cr App R (S) 20 shows that the Court of
Appeal considers Goodyear indications to be binding to
the extent that even if given in error, they override statutory
requirements to impose an indeterminate sentence for public
protection. There is also a general trend towards increased
clarity in rewards for guilty pleas following the Sentencing
Guidelines Council’s Guidelines on the issue and the
graduated system of sentence discounts developed. Cases such as
Attorney-General's Reference No. 44 of 2000 (Robin
Peverett) [2001] 1 Cr App R 27 suggest that the Court of
Appeal will prioritise the enforceability of promises made to
defendants over undue leniency or conflicting statutory
sentences. These recent developments have the effect that a
guilty defendant has (some) increased benefit from the greater
transparency and certainty of the system within which he may
exchange his right to trial for other concessions, and it is
submitted that a limited contractual analogy is apt.

However,
even Scott and Stuntz write that “contract makes the
disquiet of critics seem sensible too, since the bargaining
dynamic shortchanges the innocent” (1992a, p.1968). A
clearer, enforceable exchange of concessions will not only be
more attractive to guilty defendants, but also to innocent
defendants. A contractual conceptualisation of plea bargaining
can only be defensible if it can ensure, in so far as possible,
that factually and / or legally innocent defendants are not
induced to plead guilty contrary to their own best interests.
Baldwin and McConville examined the possibility of a defensible
model of plea bargaining but concluded that as the system could
not ensure that the defendant’s plea was free and
voluntary, or that each case was disposed of according to the
evidence, it could not be defended it was “not calculated
to avoid injustice” in the way in which a trial was
(1979, p. 216). The contractual analogy can also be critiqued
on the basis that ordinarily, a defendant has few concessions
to offer. In fact, he really only has one; his guilty plea.
Other factors such as the charge or basis of plea are
subsidiary, and the prosecution has far greater contractual
bargaining power.

Whilst
the above is true of non-fraud cases (that is, there is some
evidence of plea bargains exhibiting contractual
characteristics, but defendants do not have genuine contractual
freedoms and there remains a risk to innocent defendants), it
is argued that SFO plea agreements are different. Defendants in
serious fraud cases are more likely to be resource rich, be
more adequately represented, and aware of the SFO’s own
interests in achieving a settlement. Significantly, they have a
greater range of concessions to offer. The larger the
organisation and the more widespread the fraudulent practices
of which it is accused, the more concessions it may have at its
disposal. Corporations can agree to change business practices,
to restructure, and to submit to independent reviews of
adherence to regulations and good practice. Often this process
will already have begun prior to the conclusion of any plea
agreement, and can be used as leverage and mitigation.
Additionally, payments and other reparations can be made to
nations affected by the corruption (even if the corruption is
not admitted), as with BAE Systems’ $30m ex gratia
payment to Tanzania after pleading guilty to one minor
accounting offence. When this outcome is transposed to a
hypothetical ordinary defendant, the gulf between SFO plea
agreements and ordinary plea bargains becomes all the more
apparent. The equivalent would be a defendant accused of
multiple high value thefts over a period of years in several
villages, who once discovered cooperates with the prosecution
by agreeing to plead guilty to one count of (for example)
dishonestly retaining a wrongful credit under s.24 of the Theft
Act 1968. The defendant would agree to make a reparation (a
considerable sum but not one which would cripple him
financially) to the people of one of the villages, in addition
to promising to mend his ways, but without admitting to any of
the thefts. Part of the agreement would be that the alleged
thefts in the other villages would not be investigated and the
CPS would make a submission to the court that the defendant
should be treated leniently. Clearly, this is unthinkable to
the point of being laughable. If we leave aside the practical
impossibilities of dealing with high volume criminal cases in
this way, the real issues are that ordinary defendants simply
do not have these options or this degree of leverage over the
prosecuting agency.

Returning to the bazaar
supermarket analogy, plea bargains in serious and complex
fraud cases are perhaps the high street delicatessen of plea
bargains. The goods on offer (concessions) are varied and
individually tailored, not subject to the standardised going
rates of a chain supermarket, nor to the daily fluctuations
of a bazaar, but with some expectation that prices
(sentences) will not exceed a certain level (a suspended
prison sentence). The fact that if a defendant opts out of a
plea agreement, information can still be used against him
mitigates against complete contractual freedom. But even in
conventional contractual relationships, it will often be the
case that one party is at an advantage or that there are
limitations to the freedom. If a purely contractual approach
is adopted where plea bargains are viewed in terms of
concessions, not rights, then it is no different to a
consumer having to pay a fee upon cancellation of a flight
booking.

7. Conclusions

In summary, there is currently little (if any) evidence to suggest
that defendants in SFO cases are pressurised into pleading
guilty. Further, empirical, work is needed to examine the
nature of the plea bargains more closely, but in the high
profile cases discussed, the defendants do not appear to
exhibit any of the vulnerabilities of ordinary criminal
defendants which would render them susceptible to being
pressurised into undesirable or unjust plea bargains. There is,
on the contrary, the suggestion that large organisations are
able to ‘play the system’ by offering to pay
penalties, entering into global settlement agreements, and
escaping more serious charges and sentences as a result. This,
however, is too crude a view of the situation. The SFO is
itself subverting the adversarial system; defendants cannot be
blamed for the agency’s desire to save money and
demonstrate its own efficacy by favouring settlements over
prosecutions. When other models of plea bargaining are
considered, consensual approaches are unlikely to be founded in
the reality of the practice. Consensus to which the defendant
is party requires a level of voluntariness which will never be
present in criminal proceedings. Contractual perspectives more
accurately describe the exchanges of entitlements, based on
relative bargaining positions determined by the evidence and
other facts of the case, which are a feature of SFO plea
agreements.

It is
doubtful whether even the application of a full range of
contractual safeguards could ever position an ordinary
defendant at a level of bargaining power sufficiently close to
that of the prosecution. Given the inherent problems of the
principal – agent dynamic between the defendant and his
barrister it is unlikely that a defendant can achieve equality
of bargaining power with his own lawyer, let alone the
prosecution. (13) The greatest inducements to plead guilty would
invariably be offered to those defendants with the strongest
cases, as their right to trial would have greater value. It is
questionable whether defendants in this situation could be
immune from unconscionable pressure to ‘sell’ their
chance of acquittal. However, in SFO cases, defendants and / or
the organisations under investigation are in a considerably
better position to contract and at times appear to have greater
bargaining power than the prosecution. Concluded SFO plea
agreements are joint endeavours between the defence and the
prosecution. This is demonstrated most clearly in
Innospec and Dougall by the SFO advocating on
behalf of the defence in putting forward a suggested (lenient)
sentence and openly expressing the view that it was in the
agency’s interests that criminals in such cases should be
kept out of prison.

This begs the question
as to whether this degree of cooperation, within the context
of what appears to be a contractual relationship, is
desirable or just in serious and complex fraud cases. The
former Attorney General, Lord Goldsmith, has said that:

“…I don’t see why it should not be
possible for experienced prosecutors, who can understand
the public interest, together with well advised
corporations to be able to reach an agreement and then say
to the judge this is what we think and this is why. It is
not traditional English criminal sentencing thinking, but I
don’t agree with that.” (The Guardian
5th Jan 2011).

This would
mean that prosecutors and corporations would be entrusted with
the task of reaching just outcomes; Lord Goldsmith implies that
the judicial role in overseeing any such agreements should be
minimal. If the SFO has a vested interest in reaching an
agreement, is willing to assist the corporation in achieving an
agreeable outcome in order to do so, and the corporation has
considerable bargaining power, then there is no guarantee that
the resulting agreement will reflect the wider interests of
justice. Far from tackling fraud and corruption, this
perpetuates the perception that white collar criminals are less
culpable and that multinational organisations are beyond the
grasp of the criminal law. Of equal concern is the possibility
that the SFO model of plea bargaining could in the future be
adopted for other offences, on the basis of its perceived
success from the perspective of both prosecutors and policy
makers. As the discussion above has demonstrated though,
‘ordinary’ criminal cases are rather different.
Even if whole scale plea bargaining were to be formalised in
the same way as the SFO procedure, this would not guard against
undue pressures to plead guilty in cases where much more is at
stake for the individuals involved.

There still exists a real
gulf between policy and practice regarding plea bargaining in
England and Wales, most evidently when it comes to informal
plea bargains, but also regarding the SFO procedure. In
Baroness Scotland’s initial announcement of the powers,
she stated that the measures were:

“[N]ot about offering discounts, immunity or
incentives to fraudsters. It doesn’t
require a defendant to assist the prosecution and is
careful to avoid a perception of ‘plea
bargaining’ associated with the US.” (Attorney
General’s Office, Press Release, 18th March 2009)

The key issue here seems to be
the avoidance of negative perceptions of plea
bargaining, at the expense of genuine transparency
surrounding the process. Of course plea agreements offer
discounts and incentives to defendants, if they did not, they
would not be entered into. That is the very purpose of any
plea agreement - leniency in exchange for a guilty plea. And
whilst a defendant is not ‘required’ to assist
the prosecution, doing so ensures far greater concessions and
the likelihood of avoiding a custodial sentence. In order to
examine the procedure more closely, this article has taken an
exploratory approach in applying conceptualisations of plea
bargaining to both informal plea bargains and plea agreements
in serious fraud cases. Whilst alternative approaches can not
readily be applied to informal plea bargains, a concessions /
contractual approach is at minimum a valuable analytical tool
with which to examine the nature of SFO plea agreements. At
present, although we know the outcomes of cases which have
employed the SFO measures, we do not know enough about the
nature of the bargaining dynamic. Future empirical research
would no doubt result in a deeper understanding of the plea
bargaining process which is such a common, but
under-researched, feature of the criminal justice system in
England and Wales.

Council of HM Circuit Judges The Introduction of a Plea
Negotiation Framework for Fraud Cases in England and Wales:
Observations of the Criminal Sub Committee of the Council of HM
Circuit Judges (
London
2008)

Stephen
F and Garoupa N ‘Why plea bargaining fails to achieve
results in so many criminal justice systems: a new framework for
assessment’ (2008) 15 Maastricht Journal of European
and Comparative Law 319

(4) The SFO deems fraud to
be serious or complex if at least two of the following factors
are present: the amount concerned is in excess of £500,000;
there is a significant international dimension; the case requires
specialised knowledge of financial or related matters; the case
involves numerous alleged victims; the case involves alleged
significant fraud on a public body; the case is likely to be of
widespread concern; the alleged misconduct endangered the
economic well-being of the UK.

(7) It should be noted that
the Bribery Act 2010, in force since July 2011, provides for a
maximum custodial sentence of ten years, and promises to tackle
international commercial bribery, but if even the prosecuting
authorities express a preference for suspended sentences, there
seems little likelihood of sentences of that level in all but the
most exceptional of cases.

(10) The literature on
contractual models deals largely with applying classical contract
theory to plea bargains, and does not expressly consider the
relationship between contract theory and concessions more
generally (see for example Schulhofer 1992; Scott and Stuntz
1992a, 1992b).

(11) There is a
considerable body of literature on lawyers’ working
practices which also emphasises the role and significance of
shared understandings in creating routinized working practices in
both England and Wales and the United States which supports this
view, for example Blumberg 1967; Feeley 1973; Alschuler 1975;
Jacob 1984; McConville et al. 1994; McConville and Mirsky 1995.
However, the emphasis is on routinized working practices rather
than the consensual nature of any agreements reached.

(12) See for example
McConville et al’s study, which found that lawyers held an
institutional assumption of guilt of the clients with whom they
dealt (1994, pp. 189 – 193).